Thursday, 12 September 2013

Social Resposibility of Supply Chains and Its Components

Sustainability and social responsibility in supply chains

Supply chain sustainability
is a business issue affecting an organization's supply chain or
logistics network, and is frequently quantified by comparison with SECH
ratings, which uses a triple bottom line incorporating economic, social,
and environmental aspects.
SECH ratings are defined as social, ethical, cultural, and health'
footprints. Consumers have become more aware of the environmental impact
of their purchases and companies' SECH ratings and, along with non-governmental organizations (NGOs), are setting the agenda for transitions to organically grown foods, anti-sweatshop
labor codes, and locally produced goods that support independent and
small businesses. Because supply chains may account for over 75% of a
company's carbon footprint, many organizations are exploring ways to
reduce this and thus improve their SECH rating.
For example, in July 2009, Wal-Mart announced its intentions to create a global sustainability
index that would rate products according to the environmental and
social impacts of their manufacturing and distribution. The index is
intended to create environmental accountability in Wal-Mart's supply
chain and to provide motivation and infrastructure for other retail companies to do the same.
More recently, the US Dodd–Frank Wall Street Reform and Consumer Protection Act,
signed into law by President Obama in July 2010, contained a supply
chain sustainability provision in the form of the Conflict Minerals law.
This law requires SEC-regulated companies to conduct third party audits
of their supply chains in order to determine whether any tin, tantalum,
tungsten, or gold (together referred to as conflict minerals) is mined or sourced from the Democratic Republic of the Congo,
and create a report (available to the general public and SEC) detailing
the due diligence efforts taken and the results of the audit. The chain
of suppliers and vendors to these reporting companies will be expected
to provide appropriate supporting information.
Incidents like the 2013 Savar building collapse with more than 1,100 victims have led to widespread discussions about corporate social responsibility
across global supply chains. Wieland and Handfield (2013) suggest that
companies need to audit products and suppliers and that supplier
auditing needs to go beyond direct relationships with first-tier
suppliers. They also demonstrate that visibility needs to be improved if
supply cannot be directly controlled and that smart and electronic
technologies play a key role to improve visibility. Finally, they
highlight that collaboration with local partners, across the industry
and with universities is crucial to successfully managing social
responsibility in supply chains.

Components

Management components

SCM components are the third element of the four-square circulation
framework. The level of integration and management of a business process
link is a function of the number and level of components added to the
link (Ellram and Cooper, 1990; Houlihan, 1985). Consequently, adding
more management components or increasing the level of each component can
increase the level of integration of the business process link.
Literature on business process re-engineering buyer-supplier relationships, and SCM
suggests various possible components that should receive managerial
attention when managing supply relationships. Lambert and Cooper (2000)
identified the following components:

Planning and control

Work structure

Organization structure

Product flow facility structure

Information flow facility structure

Management methods

Power and leadership structure

Risk and reward structure

Culture and attitude

However, a more careful examination of the existing literature
leads to a more comprehensive understanding of what should be the key
critical supply chain components, or "branches" of the previously
identified supply chain business processes—that is, what kind of
relationship the components may have that are related to suppliers and
customers. Bowersox and Closs (1996) state that the emphasis on
cooperation represents the synergism leading to the highest level of
joint achievement. A primary-level channel participant is a business
that is willing to participate in responsibility for inventory ownership
or assume other financial risks, thus including primary level
components (Bowersox and Closs, 1996). A secondary-level participant
(specialized) is a business that participates in channel relationships
by performing essential services for primary participants, including
secondary level components, which support primary participants.
Third-level channel participants and components that support
primary-level channel participants and are the fundamental branches of
secondary-level components may also be included.
Consequently, Lambert and Cooper's framework of supply chain
components does not lead to any conclusion about what are the primary-
or secondary-level (specialized) supply chain components (see Bowersox
and Closs, 1996, p. 93) —that is, which supply chain components should
be viewed as primary or secondary, how these components should be
structured in order to achieve a more comprehensive supply chain
structure, and how to examine the supply chain as an integrative one
(See above sections 2.1 and 3.1).

Reverse supply chain

Reverse logistics
is the process of managing the return of goods. It is also referred to
as "aftermarket customer services". Any time money is taken from a
company's warranty reserve or service logistics budget, one can speak of
a reverse logistics operation.

Systems and value

Supply chain systems configure value for those that organize the
networks. Value is the additional revenue over and above the costs of
building the network. Co-creating value and sharing the benefits
appropriately to encourage effective participation is a key challenge
for any supply system. Tony Hines defines value as follows: "Ultimately
it is the customer who pays the price for service delivered that
confirms value and not the producer who simply adds cost until that
point".

Complex problems involve also midsized companies to an increasing degree

These trends have many benefits for manufacturers because they make
possible larger lot sizes, lower taxes, and better environments (e.g.,
culture, infrastructure, special tax zones, or sophisticated OEM) for
their products. There are many additional challenges when the scope of
supply chains is global. This is because with a supply chain of a larger
scope, the lead time is much longer, and because there are more issues
involved, such as multiple currencies, policies, and laws. The
consequent problems include different currencies and valuations in
different countries, different tax laws, different trading protocols,
and lack of transparency of cost and profit.

Supply chain centroids

In the study of supply chain management, the concept of centroids has
become an important economic consideration. A centroid is a location
that has a high proportion of a country's population and a high
proportion of its manufacturing, generally within 500 mi (805 km). In
the US, two major supply chain centroids have been defined, one near
Dayton, Ohio, and a second near Riverside, California.
The centroid near Dayton is particularly important because it is
closest to the population center of the US and Canada. Dayton is within
500 miles of 60% of the US population and manufacturing capacity, as
well as 60% of Canada's population.
The region includes the interchange between I-70 and I-75, one of the
busiest in the nation, with 154,000 vehicles passing through per day,
30–35% of which are trucks hauling goods. In addition, the I-75 corridor
is home to the busiest north-south rail route east of the Mississippi
River.

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About Me

Lifetime Chartered Member" of "The Chartered Institute of Logistics & Transport - India", New Delhi . I am working a Trainer, Tutor and Course Provider for Logistics and Supply Chain Management . Also provide counseling service to students and professionals regarding education, training and job in the field of Logistics and Supply Chain Management .